Tesla declared a massive drop in auto sales in Q1, down 31% compared to the prior quarter. Total sales included about 50,900 Model 3 sedans, Tesla's best-selling vehicle, and 12,100 luxury Model S sedans and Model X SUVs.
These figures are indeed a matter of concern for investors, as the company's sizeable debt lingers in the backdrop. However, the company revealed that sales figures may not accurately reflect demand as, according to the company’s policy, owners pay when the vehicles are delivered to them and not when they place an order.
Analysts outline a couple of reasons for the decline of Tesla’s Model 3 vehicles, the company’s bestselling offering. Firstly, the company hastened to finish Model 3 production last year so buyers could take advantage of a $7,500 federal tax credit, which lowered the amount people had to pay for Tesla's vehicles.
Secondly, the company started shipping its Model 3 to China and Europe for the first time in the first quarter. This entry into the international market was fraught with challenges over shipment issues Tesla said, as about 10,600 vehicles were in transit when the first quarter ended.
However, the company said that it ended Q1 with enough cash to pay debts even though it has another two big chunks - $566 million debt issue that is due in November, followed by another $1.4 billion in notes that is due in two years.